Sami Kakar, P.E.

Sami Kakar, P.E.

 BALOCHISTAN UNIVERSITY OF INFORMATION
TECHNOLGY ENGINEERING & MANAGEMENT SCIENCES

ENGINEERING
BY:
ECONOMICS
Sami Kakar, P.E.
LECTURER
DEPARTMENT OF CIVIL ENGINEERING

Sami Kakar, P.E.

Business Organizations

Sami Kakar, P.E.

 Business Organizations
• Business organization is the single-most important
choice you’ll make regarding your company.
• What form your business adopts will affect a multitude
of factors, many of which will decide your company’s
future.
• Aligning your goals to your business organization type
is an important step, so understanding the pros and
cons of each type is crucial.
Sami Kakar, P.E.
 Business Organizations

Your company’s form

will affect:
• How you are taxed
• Your legal liability
• Costs of formation
• Operational costs
Sami Kakar, P.E.
 Forms of Business Organization
1. Sole Proprietorship
2. Partnership
3. Corporation
4. LLC
5. Franchising

Sami Kakar, P.E.

Sami Kakar, P.E.
 Forms of Business Organization
1. Sole Proprietorship
• Most common business
• Easiest form of business to start
and put an end to.
• Can be set any where e.g. home
online, YouTube channel, street
vendor.
• No extra tax to be paid except
income tax.
• Hard to find financial capital
• Limited life Sami Kakar, P.E.
Forms of Business Organization

Sami Kakar, P.E.

 Forms of Business Organization
2. Partnership
• business owned jointly by at least
two or more persons termed as
PARTNERS
• Partners assume all risk of loss and
receive all profit.
• Two types: General and Limited
Partnership.
• In general partnerships, All partners invest their money, property,
labor, etc. to the business and are equally liable for profit and loss.
Sami Kakar, P.E.
 Forms of Business Organization

• Limited partnerships require a formal agreement between the

partners.
• They must also file a certificate of partnership with the state.
• Limited partnerships allow partners to limit their own liability for
business debts according to their portion of ownership or
investment.
• A Sleeping Partner is one who invests money but takes no part in
the day to day running.

Sami Kakar, P.E.

 Forms of Business Organization
Advantages of partnerships:
 Shared resources provides more capital for the business
 Each partner shares the total profits of the company
 Similar flexibility and simple design of a proprietorship
 Inexpensive to establish a business partnership
Disadvantages:
 Each partner is 100% responsible for debts and losses
 Selling the business is difficult—requires finding new partner
 Partnership ends when any partner decides to end it
Sami Kakar, P.E.
Sami Kakar, P.E.
 Forms of Business Organization
3. Corporations
• A form of business organization that is created by law,
• functions as a separate legal entity and are considered as Legal
Individual as they can enter contracts, loan and borrow money,
sue and be sued, hire employees, own assets, and pay taxes.
• is owned by two or more individuals called stockholders.
• Stock is a share in the ownership of a corporation. It represents a
claim on the assets and earnings of a corporation.
• The board of directors, an elected group from the stockholders,
controls the activities of the corporation.
Microsoft Corporation, the Coca-Cola Company, Toyota
Motor Corporation, HBL, ZONG, PSO, Sami Kakar, P.E.
 Forms of Business Organization

WHY there is a need for

Corporation?

• Business can be shared

• Liabilities are Limited

Sami Kakar, P.E.

Advantages of a corporation:
 Limits liability of the owner to debts or losses
 Profits and losses belong to the corporation
 Can be transferred to new owners fairly easily
 Personal assets cannot be seized to pay for business debts
Disadvantages of a corporation:
 Corporate operations are costly
 Establishing a corporation is costly
 Start a corporate business requires complex paperwork
 With some exceptions, corporate income is taxed twice

Sami Kakar, P.E.

4. Limited Liability Company (LLC)

• Newer type of business that is a blend between a partnership and a

corporation
• Instead of shareholders, LLC owners are referred to as members.
• LLCs aren't taxed as a separate business entity. Instead, all profits and
losses are moved from the business to the LLC members, who report
profits and losses on a personal tax return.
• Members aren't personally liable for business decisions or actions of the
company in question
• There is far less paperwork involved in creating an LLC as compared to a
corporation.
• Allows small groups of people to easily form a company together

Sami Kakar, P.E.

Sami Kakar, P.E.
4. Franchising
• It is a system by which a firm expands into new
neighborhoods and towns (or foreign countries) by
selling the rights to use the company's name and
products to individuals.
• The franchising company provides training services and
an advertising campaign for the purchaser of the
franchise.
• In turn, the purchaser agrees to meet certain quality
standards, provide certain products, and pay a franchise
fee to the franchising organization.
Sami Kakar, P.E.
All the diagrams and figures displayed in this presentation are solely used for educational purposes Sami Kakar, P.E.